News Analysis – May 2016

General News Summary

Terror + Tunnels = Tension

Even though both Israel and Hamas keep insisting they’re not interested in an escalation, tension along Israel’s Gaza Strip border kept rising in early May. The reason: Intermittent tit-for-tat exchanges of rocket and small arms fire from the Gaza side followed by Israeli retaliatory artillery and air attacks. The Gaza border began heating up at the same time that there was an apparent decline, after more than six months, in the number of knife and car-ramming attacks by usually unaffiliated Palestinians against Israelis and IDF soldiers, mostly in Jerusalem and the West Bank.

Observers on both sides said the situation, though not explosive at the moment, was fraught with danger. A severe incident – anything from a direct hit by a Palestinian mortar shell on a group of soldiers or civilians, with multiple casualties, or a similar incident on the Palestinian side, could trigger a rapid deterioration into the large-scale conflagration neither side wants.

Much of the Palestinian fire was directed at Israeli units operating across the Gaza side of the border, looking for signs of attack tunnels penetrating into Israeli territory. Two such tunnels were found over the last month; according to press reports, at least one of them was located with the help of a former Hamas operative.

Help aside, for almost two years – since 2014’s Operation Protective Edge – Israel has invested heavily in technology to detect Hamas-built tunnels, which pose a severe threat to villages and communities on the Israeli side of the border. A first of its kind in the world, the Israeli counter-system reportedly includes a series of sensors that will provide data, deciphered by advanced algorithms, allowing security forces to accurately detect and locate tunnel-digging operations.

The stage to which the system has been developed is not publicized, though there have been reports in the press that its deployment is imminent. Completion of a working system has taken on added urgency with sighting of heavy construction and excavation on the Gaza side of the border fence, combined with reports that Hamas is using cement it acquires in Israel for “reconstruction of damaged civilian neighborhoods destroyed in the 2014 fighting – both for fortification of the tunnels against another Israeli penetration and offensive tunnels into Israel territory.

According to one report, the IDF has deployed large quantity of heavy earth moving equipment along the Gaza border in an intensive search for tunnels. Israel has significantly reduced the amount of cement and building materials headed to Gaza.

Speaking after the discovery of one tunnel, in April, Prime Minister Benjamin Netanyahu compared the new anti-tunnel system to Iron Dome, its anti-missile system which successfully intercepted most of the rockets fired on cities and villages in 2014. “Israel has made a great achievement in its effort to find a solution to the tunnels. Just as we developed the Iron Dome aerial system we are developing an underground Iron Dome system,” he said. According to some reports, Israel has invested about $250M, in the development of tunnel-detection technologies.

Comptroller’s Criticism

State Comptroller Joseph Shapira reportedly has been critical of the Israeli leadership’s performance during 2014’s Operation “Protective Shield”. According to sources who have seen the draft of the comptroller’s still-unissued report, Prime Minister Benjamin Netanyahu and Defense Minister Moshe (Bogie) Ya’alon are accused of not updating the security cabinet in real time of the imminent threat of war and not discussing the serious threat posed by Hamas’s attack tunnels.

As opposition politicians mounted criticism, Netanyahu and Ya’alon dismissed the unpublished Shapira report, which they have seen, as “not serious.” A source close to Netanyahu said, “The operation was conducted with unprecedented transparency vis-a-vis the security cabinet. Over the course of the operation, Netanyahu convened the cabinet dozens of times, more than during any other military operation in Israel’s history.”

Shadow over Aid Talks

Israeli defense contractors have expressed concern over the Obama administration’s proposal that US military aid to Israel be used only for purchases from US companies. The demand is part of ongoing negotiations between Washington and Jerusalem over Israel’s request that military aid be raised from the current annual $3.1B to $4B as part of Israel’s compensation for the nuclear agreement with Iran. Israel has asked for $10B in extra US aid, spread over a period of a decade, so that it can guarantee its qualitative advantage in light of the procurement of advanced weapons by other Middle Eastern states, as well the increased Iranian threat.

Negotiations over the increased aid package have been under way for months, without visible signs of progress. 83 US senators have signed a letter urging Obama to increase the Israeli aid package. According to some reports, Prime Minister Benjamin Netanyahu may prefer to wait until after the US elections, in the hope that a more favorable deal than that offered might be reached with a new administration.

Life Sentence Plus

Yosef Haim Ben David, the convicted ringleader of the murder of 16-year-old Palestinian Muhammad Abu Khedir last July, has been sentenced to life imprisonment plus 20 years by an Israeli court. Ben David’s two under-age accomplices previously had been sentenced to life and 17 years, respectively, for their role in the kidnap and burning to death of Abu Khedir in Jerusalem.

Ben David’s sentencing had been delayed by the defendant’s assertion that he was mentally ill, pleading insanity at the time of the killing. In a statement after the sentencing, the Justice Ministry said in a statement: “The court has found that at the time he committed the offense, the accused was not psychotic, fully understood the facts, was responsible for his actions, had no difficulty in understanding reality and had the capacity to prevent the crime.” Ben David’s father accused the prosecution of ignoring the state of his son’s mental health and dismissing expert opinion from overseas.

Saudi-Egyptian Connection

Saudi Arabia and Egypt will have a direct surface link for the first time with the completion of a planned bridge spanning the Straits of Tiran, at the entrance to the Gulf of Aqaba/Eilat. Saudi King Salman bin Abdulaziz al-Saud and Egyptian President Abdel-Fattah al-Sissi announced plans to build the bridge during the Saudi monarch’s early-April visit to Cairo. Egypt and Saudi Arabia also defined their maritime border, with Cairo ceding its previous claim to the islands of Tiran and Snapir, which command part of the maritime gateway. Israel occupied Tiran, which is uninhabited, between the Six-Day War of 1967 and full implementation of the Israel-Egyptian peace agreement in 1982.

Egypt reportedly informed Israel prior to announcing its agreement with Saudi Arabia, as required by the terms of the 1979 Israel-Egyptian peace agreement. Defense Minister Moshe (Bogie) Ya’alon later said that Israel had received a document guaranteeing that all parties would honor the terms of the peace agreement and that Saudi Arabia, which has no formal ties with Israel, pledged to allow freedom of shipping through the Tiran Straits.

Katsav Denied Pardon

Former Israeli President Moshe Katsav pleaded to President Rivlin for his early release from prison. His earlier request for release has been denied by the relevant commission. An Israel Prison Service committee decided in early March that Katsav would serve his full seven-year sentence for two counts of rape and other sex-related crimes. It was the third request for term reduction by Katsav, who has already served almost 4½ years of his sentence for rape. Katsav, who claims to be a victim of the law-enforcement system, continues to deny the rape charges. Katsav requested clemency from President Reuven (Ruby) Rivlin, alleging that his health had deteriorated sharply since the negative parole board decision.

Immigrants and US Startups

Immigrants founded more than half of the US startups valued at $1B or more, according to a late-March report by the National Foundation for American policy. Among that group, which in all amounts to 44 countries: India, with 14 had the largest number, followed by Canada and the UK, 8 each, and Israel’s 7.

Tickets to Rio

Thirty Israeli athletes have so far met Olympic criteria and will participate in the Olympic Games in Rio de Janiero this summer. Among them are backstroke swimmer Ya’akov Tumarkin, freestyle wrestler Ilana Kratysh, triple-jumper Hanna Knyazyeva-Minenko and the women’s rhythmic gymnastics team.

The Economy

Court Slows Down Gas Concession

The government is seeking ways to revise its agreement with developers of the massive Leviathan offshore natural gas field in the wake of a March 27 Supreme Court decision demanding a different clause that would have assured that future governments would not alter regulations affecting the field for 10 years. The court delayed enforcement of the ruling for a year, to allow time for the agreement to be amended.

The main partners in the gas concession, Noble Energy of the US and Israel’s Delek Group, have argued that the so-called “stability clause” was necessary if they are to make the investments necessary to develop the field.

Prime Minister Benjamin Netanyahu, who pushed hard for the deal and had to overcome bureaucratic and political opposition before he could sign it last November, minced few words in his criticism of the court decision, saying it was “hard to understand” and that it “severely threatens the development of Israel’s gas reserves. Israel is seen as a country with exaggerated legal interference that makes doing business hard.”

Meanwhile, the Energy Ministry has published a new assessment which almost triples the estimated volume of natural gas under Israeli territorial waters. According to the new assessment, based on a report by a French consultancy firm, there may be as much as 2.1 trillion (2,100 billion) cubic meters (BCMs) of natural gas, in contrast to the previously estimated 680 BCMs. The Tamar and Leviathan gas fields have already yielded 750-950 BCM of natural gas. According to the French report, four untapped layers of the seabed could contain gas. In addition, the report suggested a potential 6.6 billion barrels of petroleum under the waters.

Strong Ratings

Moody’s, the international credit-rating agency, has confirmed Israel’s A1 rating with a stable outlook. Moody’s economists said the rating was supported by economic flexibility and the great effectiveness of the government, which is constantly working to improve Israel’s debt and financing figures. Were it not for Israel’s geopolitical risks, its credit rating would be higher, Moody’s said.

In mid-April, the Fitch ratings agency upgraded Israel’s credit rating outlook to “positive” for its foreign currency debt, while retaining its A rating. Fitch thereby restored its previous rating outlook, after downgrading Israel’s outlook from positive to stable in 2014.

Growth Forecast Lowered

The Finance Ministry’s chief economist has lowered his growth forecast for 2016 – 0.1% to 2.8%. At the same time, Yoel Naveh upwardly revised his revenue forecast by NIS 1.4B and his deficit forecast to 2.8% of GDP, compared with the state budget target of 2.9%. Naveh raised his forecasts for salary growth and unemployment.

Exports Decline in First Quarter

Exports of Israeli goods fell by an annualized 14.1% in the first quarter, following a 5.9% annualized decline in the fourth quarter of 2015. The weak first-quarter exports created an exceptional NIS 10.1B trade deficit in goods, compared with a NIS 4.1B deficit in the corresponding quarter in 2015. According to the Central Bureau of Statistics, the first quarter trade deficit for goods was greater than the trade deficit in goods in all of 2015.

Record FC Reserves

Israel’s foreign exchange reserves stood at a record $94.775B at the end of March, up $4.156B from the end of the previous month. The increase was a result of foreign currency purchases by the Bank of Israel totaling $700M, of which $300M were bought as part of the purchase program intended to offset the effects of natural gas production on the exchange rate.

Intel Buying

Intel, the American chipmaker, has spent $10B on procurement in the Israeli market over the past decade. Figures provided by the company show that 80% of its purchases in Israel were from small and medium-sized businesses, and it spends an annual average of $1B on procurement from 1,000 different Israeli suppliers. Half of this $10B total has been recognized as part of the reciprocal procurement undertaken by Intel, which operates plants in Kiryat Gat and Jerusalem, as a condition for the grants and benefits it received over the years from the Ministry of Economy and Trade Investment Promotion Center; Intel claims it bought six times what it was required in its agreements with the state.

Bank Head Quits

Zion Kenan, CEO of Bank Hapoalim for the past seven years, resigned in late March. Ari Pinto, the bank’s deputy CEO and head of strategy, resources and operations, is expected to replace him when Kenan officially steps down in six months. Though Kenan, 60, did not offer a reason for his resignation, it comes a week after passage of a law limiting the salary of senior officers in financial firms to 44 times the payment of the lowest-paid employee in the firm, up to a maximum of NIS 2.5 (about $650,000) million a year, after which tax penalties come into effect. Kenan was paid NIS 7.9M in 2015.

High-Tech Financing

173 Israeli high-tech companies raised $1.09B in private financing rounds, up 8% from the corresponding quarter of 2015, when 162 companies raised $1B, according to a survey by IVC-KPMG. The first quarter 2016 figure is 105 down from the record $1.2B raised by 201 companies in the fourth quarter of 2015.

Meanwhile, the tech.eu website reported that Israel had Europe’s largest number of start-up exits in the first quarter of 2016. Sweden was in second place.

Chinese Talks

Israel and China have begun talks on a free-trade agreement between the two countries, Prime Minister Benjamin Netanyahu and Chinese Vice Premier Liu Yandong announced in late March. The two men met in Jerusalem, at the launch of the 2016 Israel-China Committee for Cooperation in Innovation summit.

Arkia Adds Airliner

Israel’s Arkia Airlines has added an E190 jet made by Embraer of Brazil to its fleet, which now amounts to 9 aircraft. Arkia already owns two Embraers, two Boeing jets and three ATR-72 aircraft. Like Arkia’s other two Embraer jets, the new E190 will be used on various routes from Sde Dov and Ben Gurion Airports to destinations including the Greek islands (Rhodes, Cos, Heraklion and Chania Airports in Crete), Paphos and Larnaca airports in Cyprus, Bucharest in Romania, Tbilisi and Batumi in Georgia, Minsk in Belarus and Ohrid in Macedonia.

Finance & Investment

Fast Financing Pace

Fundraising by Israeli startups continued to move at a fast past similar to last year, according to a report in the Globes business daily. The paper’s survey said that 81 startups raised $1.02B in the first quarter of 2016, compared with $4.4B in all of 2015. The figures far eclipse 2012, a total of $1.8B was raised in the entire year.

Chinese Visitors

Senior executives from Chinese conglomerate HNA Group, China’s largest private tourism entity, visited Israel in late April to examine possible investment in an Israeli hotel. HNA owns Hainan Airlines, which has just launched its Tel Aviv-Beijing route with three weekly flights. Until now, only Israel’s El Al has operated direct flights on the Tel Aviv-Bejing route.

Big Break for Tata

A ruling by Hedva Bar, the Bank of Israel’s supervisor of banking, has opened the way for India’s Tata conglomerate to dominate banking computerization in Israel. According to a report in Ha’aretz, Bar has proposed that all banks other than the Big Three – Hapoalim, Leumi and Discount, including new banks, be allowed to share a computer system. The leading candidate for such a system is India’s Tata, which has already provided a new system for Bank Yahav, one of the smaller Israeli financial institutions.

Mergers and Acquisitions

Magal-Aimetis

Magal Security Systems, based in Yehud near Ben-Gurion International Airport, has acquired Ametis, a Canadian provider of video camera security software, at a company valuation of $14M. Solutions by Aimetis, of Ontario, are sold through distributors in over 100 countries around the world. The company has branches in Brazil, Germany, China, and Dubai.

Cisco-Leaba

Global networking giant Cisco Systems has acquired Leaba Semiconductor, a fabless chipmaker based in Caesarea, about halfway between Tel Aviv and Haifa, for $320M. Very little has been made public about the 2-year-old Leaba, which prior to the sale said it was “in stealth mode,” developing semiconductors to address “significant infrastructure challenges.” One source concluded from Ministry of Economy data that Leaba specializes in the design of chips for connecting memory, storage and computing in data-center environments.

CyberArk-Agata

CyberArk, the Israeli cyber-security giant, has acquired Israeli startup Agata Solutions for an undisclosed sum. Agata, founded in 2008, develops solutions based on deep packet inspection (DPI) technology. In the past 12 months, CyberArk has acquired two other Israeli startups in the security field, Cybertine and Viewfinity.

Intel-Replay

Intel has acquired Replay Technologies, based in the Ramat Hahayal neighborhood of northern Tel Aviv, for $175M. Replay is a developer of revolutionary multi-dimensional video imaging technologies, including Free Dimensional Video (FreeDTM), which allows viewers to see and experience real-life scenes through immersive camera views from multiple angles, allowing viewers to ‘jump’ into live events and experience them from any perspective. Replay recently partnered with Intel to deliver consumer-controlled, 360-degree instant replays for the NFL during Super Bowl 50 and for the NBA during the All-Star Weekend.

Yokahama Rubber-Alliance

Yokohama Rubber Co. is buying Israel’s Alliance Tire Group for $1.18B from private equity company KKR. The company, which was once on the brink of bankruptcy, was sold to KKR three years ago for $500M. Yokohama Rubber, which aims to enter the agricultural and forest machinery market where Alliance tires has expertise, expects to complete the acquisition by July 1.

Alliance tires in Hadera is owned by India’s Alliance Tire Group (ATG), which manufactures and sells tires to 120 countries. 20% of ATG’s business and 650 of its 3,000 employees are in Israel with the remainder in India. Isia Tchetchik, an Israeli, has served as the company chairman since 2002.

Fosun-Ahava

Ahava, the manufacturer of Dead Sea cosmetics, has been sold to China’s Fosun investment group for $77M. Ahava manufactures and sells cosmetic products for skin care from minerals and mud produced at the Dead Sea and Fosun is reportedly interested in introducing the products to the Chinese market. Fosun is acquiring the holdings of all the Ahava shareholders – Gaon Holdings, the Livnat family, Shamrock Israel Growth Fund Advisors, Kibbutz Mitzpe Shalem and Kibbutz Kalia.

Francisco Partners-Sintec Media

Francisco Partners, a San Francisco and London private equity fund, has acquired SintecMedia, a Jerusalem-based developer of management applications for broadcasters, for $400M. In 2014 Sintec, which had been founded in 2000, acquired its rival Pilat Media for $103M. It is the third Israeli acquisition for Francisco, which bought Clicksoftware in 2015 for $438M and NSO, a homeland security specialist, for over $100M.

Oracle-Crosswise

Oracle, the US-based software giant, has purchased Tel Aviv-based Crosswise for a reported $50M. Crosswise big data, data science and machine-learning based system identifies PCs, phones, tablets, digital TVs and other connected devices are being used by individual consumers. This, according to Oracle, “enables marketers and premium publishers to realize the benefits of cross-device advertising, personalization and analytics.” to help advertisers target appropriate consumers.

Cadence-Rocketick

Cadence Design Systems has acquired Rocketicik, a Ramat Gan-based specialist in technology that speeds up chip development. Purchase price was not disclosed, but press reports estimate it at around $40M. Rocketick’s three founders all served in the Israel Defense Forces famed 8200 Intelligence unit.

Twist Bio-Genome Compiler

Twist Bioscience, a San Francisco maker of synthetic DNA, has purchased Israel’s Genome Compiler Corp. for an undisclosed price. Twist plans to use the software that Haifa-based Genome Compiler develops for genetic engineers and molecular and synthetic biologists to create new products, including an ecommerce solution with gene-design capabilities.

BTG-Galil Medical

British healthcare provider BTG has acquired Israel’s Galil Medical for $110M. Based in Yokne’am, near Haifa, Galil Medical is the developer of cryoablation systems and needles for treating kidney, prostate and other types of cancer. BTG, traded on the London Stock Exchange and Nasdaq specializes in cancer treatments and medical devices and has a market cap of $2.2B. In the 1990s, Galil Medical developed a minimally invasive medical device to burn tissues through needles used for freezing. Its first target was prostate cancer.

Frutarom-Extrakt Chemie

Frutarom, the Israeli flavors and food ingredients firm, has acquired 100% of Germany’s Extrakt Chemie in a deal, including assumption of debt, valued at about $8.2M. Established in 1969, the German firm develops, produces and markets specialty solutions of natural extracts, some including plant-sourced enzymes for use mainly as raw material in the pharmaceutical market, for treatment of liver diseases, digestive problems and preventing infection. Besides Germany, it is also active in Denmark, Switzerland, France and Austria and in Australia.

DBSI Eyes Rada

DBSI, a private investment firm owned by Israelis Barak Dotan and Yosi Ben Shalom, is in the process of acquiring about 45% of the shares of Rada, a Netanya-based developer of radar and avionics systems. Purchase price for Rada, which is headed by former Israel Air Force commander Herzl Bodinger, reportedly is several million dollars.

Science & High Technology

Chinese Cooperation

The Alon MedTech Ventures incubator, established by Dr. Shimon Eckhouse and CEO/CTO Judith Zilberstein, is signing a cooperation agreement with Tsinghua University, considered one of China’s leading universities. This is the first cooperation agreement of its kind between an Israeli technology incubator and a Chinese entity.

The agreement is Tsinghua University’s second in Israel. In 2013, the university and Tel Aviv University agreed to establish a joint center in China for Israeli and Chinese researchers, called the XIN Research Center. Under the terms of the current agreement, Alon MedTech incubator will scan projects from the XIN Research Center and select several for further development.

According to Globes, Eckhouse, the founder of Syneron which has a current market cap of $250M, was the first investor in Ventor, sold to Medtronic for $325M, and other medical device companies.

Microsoft R&D in Arab Nazareth

Microsoft has announced plans to open a research and development center in the Arab Israeli city of Nazareth. According to Yoram Yaakobi, head of Israel R&D for the US technology company, the aim was to bring jobs closer to where Israeli Arabs live. “25 percent of computer science students at the Technion Israel Institute of Technology are Arabs, but they are less than 1% of people employed in the [tech] industry. These are people who studied computer science but return home to their villages,” he said. The aim is not just to hire male Arab engineers but women, too.

The US software giant, which has about 1,000 people in Israel at R&D centers in Herzilya and Haifa, will initially employ 30-50 people at its Nazareth center who will work on joint projects with other Israeli teams.

Building a $1B “Unicorn”

ForeScout, a developer of technology that helps corporate information technology departments detect devices they didn’t know where on their networks, this year became a “unicorn,” the name used for the elite few startup companies that have achieved valuations of $1B or more. Based in Tel Aviv and Campbell, California, ForeScout says it has tripled its valuation over the past 18 months and that its 2015 revenues topped $125M. Recent estimates indicate that there are slightly more than 200 unicorns in the world, half of them in the US.

ForeScout’s technology is designed to protect against unknown, or unwanted, devices on a company network – everything from including a guest plugged into the network during a visit for a legitimate business meeting to an outside hacker. Its CEO, Michael DeCesare, says the anticipated proliferation of connected devices – which may soar to 30 billion from the current 5 billion – can be “easy entrances for cyber criminals if not detected and protected.”

Reinventing the Wheel

SoftWheel claims to have invented the most efficient wheel in 3,500 years. The Israeli developer of innovative wheel-based technology, says that its design of three suspension arms inside the rim is designed to absorb energy from any obstacle, improving performance over rough terrain and enabling wheelchairs, for example, to be propelled upstairs with relative ease. It is currently marketing special wheels for bicycles and wheelchairs, and adapting its technology for use in automobiles and trucks. The concept was developed at the Rad Bio-Med Technology Accelerator in Tel Aviv.

What is the difference between SoftWheel’s technology and a conventional wheel. CEO Daniel Barel notes that in a traditional wheelchair, up to 30 percent of expended energy is lost due to the lack of a suspension, leaving only 70-80 percent of input for propulsion. This creates uncomfortable rides and fatigued drivers. “Most of the time, the user is driving a rigid wheel with no suspension and it breaks your back and shakes your filings loose,” Barel says.

The company currently has marketing operations in Israel, Europe and the US.

Cellebrite Rumors

Repeated unconfirmed rumors indicate that technology from Cellebrite, based in Petah Tikva east of Tel Aviv, was used by the FBI to extract data from the cellphone of San Bernadino terrorist Syed Rizwan Farook. Though some official sources have denied information was extracted from the Apple iPhone5 with the help of Cellebrite, various news sources have said that circumstantial evidence indicates use of the Israeli technology.

The FBI signed a $218,000 contract with Cellebrite on the same day that the US Justice Department said Farook’s device had been cracked. There have also been previous FBI purchases from Cellebrite.

GM Expands R&D Center

Automaker General Motors says it plans to expand its Israel development center. The center, established 9 years ago, currently has 100 employees.

Self-Driving Cars

Technology developed by Israel’s Mobileye will make fully automatic cars feasible by 2022, according to Ziv Amiram, CEO and joint founder of the Jerusalem-based developer of machine-vision technology. “The automotive market is in the midst of a huge revolution, which is understood by only a few. Within two decades, the number of vehicles will be halved and more parking areas will become green simply because we won’t need more than one vehicle, to be used according to need by me and my family, without being parked for long periods.”

Self-driving vehicles, Amiram says, will drastically cut the number of accidents and fatalities. As evidence, he observes that conventional vehicles equipped with Mobileye’s lane-detection and accident-prevention computerized systems have 40-80% fewer accidents.

Aerospace & Defense

Israel Defense Exports Rise

Israeli defense companies signed export deals worth $5.7B last year, according to figures reported by SIBAT, the Defense Ministry’s International Defense Cooperation Directorate. The figures indicate a slight rise in Israel’s defense exports in comparison with 2014, when exports totaled $5.6B.

Aircraft upgrades and sale of weapons platforms were the two largest categories of defense sales, each accounting for about 14% of total exports. Largest regional destination of exports was Asia and the Pacific, which accounted for $2.3B worth of exports. European customers totaled over $1.6B, the US and Canada over $1B, Latin America $577M, and Africa $163M.

Meanwhile, both Rafael Advanced Defense Systems and Elbit Systems, have reported increased profits for 2015. Rafael’s 2015 profit of $118M, on sales of $2.2B, represented a 30% increase over 2014. Elbit, which had sales of over $3B for 2015, said that it had recorded profits of $242M, and had a $6.6B orders backlog at the end of 2015.

Multi-Year Plan Approved

The government’s security cabinet has approved the IDF multi-annual plan for 2016-20, enabling the acquisition of new and sophisticated defense systems.

Phalcon Deal Approved

The Indian security cabinet in early March approved a $1.1B agreement to purchase two aircraft equipped with Phalcon early-warning systems from Israel Aerospace Industries. The $1.1B deal, which was expected to be signed when Indian Prime Minister Narendra Modi makes a scheduled visit to Israel, involves installation of advanced radar and other systems manufactured by IAI’s Elta subsidiary, advanced avionics and communications systems, on Russian Ilyushin-76 transport aircraft. 12e years ago, IAI supplied three Phalcon systems to the Indian Air Force in a deal valued at the time at about $1B.

New India Sales

IAI said in early April that it had signed new deals with India worth hundreds of millions of dollars. The deals included sales of air defense systems, radar and unmanned aerial vehicle systems. The announcement came shortly after the end of the Defexpo 2016 defense show in Goa.

IAI has been selling advanced defense products to the Indian Ministry of Defense and other government organizations for 25 years, has subcontracting agreements and joint ventures with numerous Indian companies and expanded its operation and cooperation with military branches, navy and air force, coast guard, border security and other agencies. Israel and India also develop systems jointing, including the Barak-8 air defense system, in its naval and land-based configurations, radar systems, unmanned systems and more.

IMI Tender Suspended

The process of privatizing government-owned Israel Military Industries was suspended in late March due to uncertainties about the status of Ori Yogev, head of the Government Companies Authority. The State Comptroller’s Office has recommended a criminal investigation of several affairs involving Yogev, a key figure in the government’s privatization team.

The probe of Yogev focuses on findings of an audit of the Mekorot National Water Company and a Mekorot subsidiary, appointment procedures for auditing accountants in government companies (through a committee in which Yogev himself was not a member); and agreements with accounting firms for conducting valuations in the IMI privatization process. The comptroller is also investigating the process of privatizing IMI itself, from which four bidders have withdrawn, leaving private defense contractor Elbit Systems as the sole remaining bidder.

Members of the government team conducting the IMI negotiations, in addition to Yogev, are Finance Ministry budget director Amir Levy and Asi Messing, the ministry’s legal adviser.

Singapore’s Iron Dome

Singapore is purchasing ELM-2084 made by Elta Systems, an integral part of the Iron Dome missile defense system, the Singapore Republic Defense Ministry has disclosed. Singapore has never disclosed whether it possesses the Iron Dome system itself.

Drone Defense

Drone Dome, a new defense system against hostile unmanned aerial vehicles, has been unveiled by Rafael Advanced Defense Systems. Drone Dome, shown at a recent defense show in Brazil, uses radar and electro-optic sensors to provide 360-degree coverage, has a very fast response time and provides “maximum safety for friendly aircraft,” according to the manufacturer.

Systems for Israel’s F-35

Israel Aerospace Industries has begun production of command, control, communications and computing (C4) systems for the F-35I, Israel’s version of the F-35 warplanes it is due to begin receiving late this year. The government-owned defense contractor has already completed system definition, prototyping and testing phases for the Adir, the IAF name for the US-made aircraft. IAI’s Lahav division has incorporated “tactical C4 architecture” especially for the IAF.

Integration of IAI’s C4 systems in the F-35I avionics program represents a major milestone in the multinational F-35 program. Fully embedded into the aircraft integrated avionic system, IAI Lahav Division “tactical C4 architecture” provides the user the latest, most advanced processing capabilities relatively independent of the aircraft’s manufacturer.

More Herons for IAF

The IAF plans to double its current force of Heron TP unmanned aerial vehicles and increase the mission load of the UAVs, known in Israel as Eitan, according to a report in Defense News. The report, which cited an IAF publication as its source, did not disclose the number of Heron/Eitan UAVs currently in IAF service in its White Eagle Squadron, which was created in 2010. Made by Israel Aerospace Industries, the Heron/Eitan weighs 4.5 tons, has a wingspan of 26 meters, and can stay aloft for up to 60 hours. In addition to the IAF, the German Defense Ministry said in January that it would lease 3-5 armed versions of the Heron, preferring the Israeli UAV to the US-made Predator B.

Rafael’s Mars Role

Fuel tanks made by Israel’s Rafael Advanced Defense Systems will play a crucial role in the ExoMars space probe, designed to land on the Red Planet sometime in 2018. The tanks, on the Schiaperelli landing module due to make the final descent onto the surface of Mars, are equipped with Rafael-supplied mini-rockets that will spring into action when the craft gets ready to land. Zvi Zuckerman, a Rafael engineer who helped develop the system, told Yediot Aharonot that the landing “will be a dramatic moment, because if anything goes wrong, the spacecraft could explode” on impact with the surface.

Elbit Contract

Elbit Systems has won a $22M contract to supply intelligence and cyber analysis and research systems for an Asia-Pacific country. The systems will be supplied over a two year period. Elbit said that the sale is of its WiT system, an advanced end-to-end intelligence and investigation solution that supports every stage of the intelligence process, including the collection of the data from multiple sources, databases and sensors, processing of the information, research, analysis and evaluation of the information.

Spain Chooses Litening III

Spain has chosen Rafael Advanced Defense Technologies’ Litening III pods to upgrade its Typhoon aircraft, according to a report on the maquina de combate website. The pod enables video transmission and real-time target identification. The selection follows trials of the pad at the Real Banderas range, as part of the modernization program for Eurfighter GmbH aircraft.

Hercules Upgrade

Lockheed Martin has won a US Department of Defense contract to upgrade Israel’s C-130 Super Hercules transport aircraft, according to a report on the Defense World website. Reported value of the contract: $92M.

Armenians Protest Sale to Azerbaijan

Armenia has protested to Israel after reports that an Israeli-made Harop unmanned aerial vehicle (UAV) had attacked pro-Armenian forces during a flare-up of its dispute with Azerbaijan over disputed Nagorno-Karabah. A video on YouTube shows what appears to be a Harop, which is made by Israel Aerospace Industries, diving towards a target in a suicide attack. UAVs were part of a $1.6B Azeri purchase from IAI in 2007. In addition to Israel and Azerbaijan, Harops have also been purchased by India.

Canadian Contract

A variant of Rafael Advanced Defense Systems’ Mini-Typhoon remote weapons station has been chosen for surface vessels of the Royal Canadian Navy. Contractor for the $58M contract is Raytheon Canada.

Colombian Turrets

Israel’s Controp Precision Technologies says it has completed delivery of a “significant” but undisclosed number of its iSea-20 and iSea-30 turrets to the Colombian Navy. The systems will be integrated into Colombian-made remote weapons systems aboard the South American country’s new offshore and coastal patrol vessels; some have already been installed on the ARC Punta Espada, ARC 20 de Julio and ARC 7 de Agosto. Based in Hod Hasharon in the high-tech belt northeast of Tel Aviv, privately owned Controp specializes in electro-optical and precision motion-control systems for homeland security, defense and surveillance.

Flying Doctors

Elbit Systems Australia will provide a Beechcraft King Air B200 flight simulation and training system for the Australian Royal Flying Doctor Service. The project was announced during New South Wales Premier Mike Baird’s early-April Israel visit. The project will provide aero-medical training for pilots as well as medical staff. The flight-training simulator will be installed and operated by Elbit Systems of Australia.

The Elbit subsidiary also was declared the winner of a $30M contract to provide thermal sights to the Australian Defense Ministry.

Relocation Tenders Due

Dozens of tenders for planning the IDF relocation to southern Israel are due to be issued soon by the Defense Ministry. The tenders involve dismantling 13 army bases on about 2,000 acres in the center of the country, and new bases in the south. In all, 10 military bases in the center will be evacuated and three others partly closed. Three new bases will be built in the Negev and there will be 19 projects in existing bases, all with the goal of significantly improving operational capabilities and reducing costs.

Successful Test

Cacador, a joint Israeli-Brazilian unmanned aerial vehicle (UAV) has successfully passed its first test, according to Brazilian media reports. Cacacador, based on Israel Aerospace Industries‘ Heron 1 UAV, is a joint project of IAI and Brazil’s Avionics Services. The UAV, which weighs 1,270 kg, can stay aloft for up to 40 hours at altitudes of 9,000 meters.

According to the Infodefensa website, the Brazilian Army aos has decided to equip its Guarani armored personnel carriers with Remax weapons positions developed by Area, a subsidiary of Israel’s Elbit Systems.

Direct Hit

Israel’s Iron Dome missile defense system, developed by Rafael Advanced Defense Systems, registered another first recently: the Hebrew Israel Today newspaper reported that it shot down an unmanned aerial vehicle in a test conducted in the US. Since its deployment 5 years ago, Iron Dome has intercepted over 1,300 rockets with a 90% success rate.

Gold Appointmentto Head Mafat

Dr. Danny Gold, head of the team that developed the Iron Dome missile defense system, is due to be named head of Mafat, the Defense Ministry’s Administration for the Development of Weapons and Technological Infrastructure. Gold will replace Ophir Shoham, who is retiring.

Tactics Adopted

The US military has adopted the “knock on the roof” technique of the IDF, firing small missiles above buildings to warn civilians of an impending strike. According to a report in Haaretz, US Air Force Maj. Gen. Peter E. Gersten, deputy commander for operations and intelligence for the anti-ISIS Operation Inherent Resolve, confirmed use of the tactic when describing an operation in Mosul. He said that US forces “to put a Hellfire on top of the building and air-burst it so it won’t destroy the building, simply knock on the roof to ensure” woman and children in the targeted building could escape. Gersten acknowledged that the IDF was “exactly where we took the tactics, technique and procedure from.”

Turkish Tank Survives Hit

An American-made Turkish Army M60T tank upgraded by IMI Israel defense industries has survived a direct hit from a Russian-made anti-tank missile fired by the Islamic State (ISIS), according to a report in Israel’s Walla website. Walla quoted a Jane‘s report that the incident took place some 30 km from Mosul, Iraq, and was shown in a video posted on an ISIS website.

Navy Lady In Command

For the first time, a woman, Captain Or Cohen, 25, has been given command of an Israel Navy missile boat, according to a report in Yediot Aharonot.

APC Test

The Ministry of Defense has released videos and still photos of tests involving an Engineering Corps bulldozer fitted with Trophy (known as Windbreaker in Hebrew), the active protection system developed by Rafael Advanced Defense Systems. The bulldozer was mounted on the platform of a Namer, the Israeli-made armored personnel carrier.

New Defense D-G

Udi Adam, a retired IDF general who currently serves as chairman of IMI Systems, has been named director-general of the Defense Ministry. Adam succeeds Dan Harel, who announced his plans to retire.

Romach Rockets Operational

The new Romach rocket system, developed by Israel Military Industries, has been deployed in IDF Artillery Corps units, according to press reports. The GPS-guided rockets can hit targets up to 35 km. away and shorten response time to sudden security incidents. According to one report, the new system increases the number of rockets that can be launched simultaneously from one platform by half, from the 12 of existing systems to 18.

Decoy Order

The US Army has awarded a $5.7M contract for delivery of decoy flares for use in Special Forces aircraft. Spectral flares are designed to divert advanced aircraft missiles equipped with heat-seeking targeted heads and air-to-air missiles based on the same technology. The flares, a central part of the protection of helicopters and fighters, can be ejected from aerial platforms.

Helicopter System Tested

Pilots from air forces around the world took part in a recent series of successful demonstration flights for Elbit Systems‘ BrightNite, which enables utility helicopters to carry out missions in poor visibility in over 90% of all nights. The test was conducted on moonless nights. According to Globes, BrightNite, mounted on an Airbus Twin-Star helicopter, provided night-flight capabilities that were similar and even exceeded those of attack helicopters.